Direct Tax Acts, Finance Act 2018

432 Meaning of “associated company” and “control
CTA76 s102; FA96 s132(1) and Sch5 Pt1 par10(4)

(1) For the purposes of this Part, a company shall be treated as another company’s associated company at a particular time if, at that time or at any time within one year previously, one of the 2 companies has control of the other company, or both companies are under the control of the same person or persons.

(2) For the purposes of this Part, a person shall be taken to have control of a company if such person exercises, or is able to exercise or is entitled to acquire, control, whether direct or indirect, over the company’s affairs, and in particular, but without prejudice to the generality of the foregoing, if such person possesses or is entitled to acquire –

(a) the greater part of the share capital or issued share capital of the company or of the voting power in the company,

(b) such part of the issued share capital of the company as would, if the whole of the income of the company were distributed among the participators (without regard to any rights which such person or any other person has as a loan creditor), entitle such person to receive the greater part of the amount so distributed, or

(c) such rights as would, in the event of the winding up of the company or in any other circumstances, entitle such person to receive the greater part of the assets of the company which would then be available for distribution among the participators.

(3) Where 2 or more persons together satisfy any of the conditions of subsection (2), they shall be taken to have control of the company.

(4) For the purposes of subsection (2), a person shall be treated as entitled to acquire anything which such person is entitled to acquire at a future date or will at a future date be entitled to acquire.

(5) For the purposes of subsections (2) and (3), there shall be attributed to any person any rights or powers of a nominee for such person, that is, any rights or powers which another person possesses on such person’s behalf or may be required to exercise on such person’s direction or behalf.

(6) For the purposes of subsections (2) and (3), there may also be attributed to any person all the rights and powers of –

(a) any company of which such person has, or such person and associates of such person have, control,

(b) any 2 or more companies of which such person has, or such person and associates of such person have, control,

(c) any associate of such person, or

(d) any 2 or more associates of such person,

including the rights and powers attributed to a company or associate under subsection (5), but excluding those attributed to an associate under this subsection, and such attributions shall be made under this subsection as will result in the company being treated as under the control of 5 or fewer participators if it can be so treated.

Go to Revenue Guidance Notes on TCA

Case Law

Whether a person was a director of composite companies. Re Paycheck Services and others; Revenue and Customs Commissioners v Holland and another – 2008 STC 3142

Settlor of a trust taken to have control of trust property by way of his “association” with trustees – Gascoines Group Ltd v Insp. of Taxes and related appeals [2004] STC 844

There may be attributed to a person the rights and powers of certain associates and companies. – R v IR Commissioners ex parte Newfields Developments Ltd. [2000] STC 52

Corresponding UK Tax Provision

Formerly Section 416, Income and Corporation Taxes Act 1988. Now re-enacted at various places in the Corporation Tax Act 2010. Refer to the Destination Table of that Act for details.

Cross references

5 Interpretation of Capital Gains Tax Acts

10 Connected persons

22 Reduced rate of corporation tax for certain income

22A Reduction of corporation tax liability in respect of certain trading income

23A Company residence

44 Exemption from corporation tax of certain securities issued by Minister for Finance

76C Use of different accounting policies within a group of companies

128D Tax treatment of directors of companies and employees who acquire restricted shares

128F Key Employee Engagement Programme

129A Dividends paid out of foreign profits

153 Distributions to non-residents

172D Exemption from dividend withholding tax for certain non-resident persons

247 Relief to companies on loans applied in acquiring interest in other companies

430 Meaning of “close company

431 Certain companies with quoted shares not to be close companies

472D Relief for key employees engaged in research and development activities

486C Relief from tax for certain start-up companies

488 Interpretation

492 Qualifying subsidiaries

519 Employee share ownership trusts

531 Payments to subcontractors in certain industries

579A Attribution of gains to beneficiaries

627 Charge to exit tax

629 Deferral of exit tax

629A Tax on non-resident company recoverable from another member of group or from controlling director

701 Transfer of shares held by certain societies to members of society

705A Interpretation and application

705B Conditions for notice under section 705E

743 Material interest in offshore funds

766 Deduction for certain expenditure on research and development

769A Interpretation (Chapter 4)

817 Schemes to avoid liability to tax under Schedule F

817C Restriction on deductibility of certain interest

825B Repayment of tax where earnings not remitted

825C Special assignee relief programme

882 Particulars to be supplied by new companies

904A Power of inspection: returns and collection of appropriate tax

985A Application of section 985 to certain perquisites, etc.

997A Credit in respect of tax deducted from emoluments of certain directors

1104 Short title and construction

Sch 12 Employee Share Ownership Trusts

Sch 12A Approved Savings-Related Share Option Schemes

Sch 12C Approved Share Option Schemes